BUSINESSWEEK ONLINE : OCTOBER 9, 2000 ISSUE
SPECIAL REPORT The Optical Elite Optical technology is shaking up the communications-equipment business, potentially toppling the powerhouses that have prevailed for a century. Here's how the top players line up. NORTEL NETWORKS (NT) LUCENT TECHNOLOGIES (LU) CISCO SYSTEMS (CSCO) The undisputed leader in the optical equipment market, it introduced gear that transmits data at 10 gigabits a second in 1996, four times faster than gear sold by rivals at the time. No.2, but fading. It was a star after its spin-off from AT&T. But missteps in the optical market include late introduction of a 10-gigabit optical system. The up-and-comer. The powerhouse of the Internet equipment market is moving into the optical world. Sales of its optical gear rose more than 50% during the second quarter. Market Share It hit 35% last year and is expected to rise to 45% of this year's $23.6 billion market. Market Share Analysts expect Lucent will be stuck at about 25% of the optical market through 2001. Market Share Just 3% of the optical market, but gaining ground. Acquisitions Bolstered by a market cap of $200 billion, Nortel has gone shopping. Its $3 billion purchase of Qtera beefed up its long-distance systems, and its $300 million deal for Cambrian gave it metro gear. Acquisitions Its stock is down 50% for the year, dropping its market cap to $102 billion. That makes it difficult to use its stock to buy hot optical upstarts. Still, its $4.5 billion acquisition of Chromatis gives it more presence in the metro market. Acquisitions Using its $392 billion market cap to buy promising upstarts, such as Cerent, giving Cisco a foothold in the optical transmission market. Now Cisco wants to sell the equipment to SBC and Verizonthe mainstays of Lucent and Nortel's business. DATA: RHK, COMPANY REPORTS _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS At the Speed of Light TABLE: The Emerging Optical Network TABLE: The Optical Elite Keeping Nortel's Pedal to the Metal ``The World's Most Glamorous Cottage Industry'' The Leading Light of Fiber Optics How High Can Optical Stocks Fly? CHART: Riding High TABLE: See the Light Photo Essay: Paving the Information Highway INTERACT E-Mail to Business Week Online

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